- The Washington Times - Friday, January 10, 2003

NEW YORK, Jan. 10 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market closed on the upside Friday, after being initially knocked down by a disappointing report on the nation's employment picture during December.

The blue-chip Dow Jones industrial average, which jumped 180.87 points Thursday, added 8.77 points to close at 8,784.95. The key index had been down as low as 8,690 earlier in the session. The tech-heavy Nasdaq composite index, which rose 37.39 points in the previous session, gained 9.29 to 1,447.75.

The broader New York Stock Exchange composite index was flat, dropping 0.54 to close at 5,209.80 while the Standard & Poor's 500 index was unchanged, closing at 927.57.

The American Stock Exchange composite index was flat, adding 0.81 to close at 833.44 while the Wilshire 5000 Index added 1.56 points to close at 8,757.54.

Volume was 1.73 billion on the Big Board and 1.55 billion on the Nasdaq Stock Market.

Analysts said stocks clawed up into positive ground as expectations for a stronger 2003 for the market helped offset disappointment over a surprising loss of jobs in December.

Larry Wachtel, senior vice president at Prudential Securities, said, "They've got an awful lot of coffee in Brazil, and they've got an awful lot of sideline money on Wall Street.

"The eye-catching snapback yesterday, and indeed, the rush out of the blocks since the new year, reflects in part the trillions sitting in low-yielding riskless investments, the new flows that surface at the beginning of each year, and the growing decision to shift out of bonds into stocks," Wachtel said.

"Of course, what is also required is a modicum of favorable news," he added.

On the economic front, the U.S. economy is slowly edging toward a full-fledged recovery, but a major economic shock, like war or a sudden spike in energy costs, could derail the rebound, the Economic Cycle Research Institute said.

Rising mortgage applications, a buoyant stock market and fewer claims for first-time unemployment benefits helped lift the Economic Cycle Research Institute's weekly leading index.

The research group's economic barometer rose to 119.1 in the week ended Jan. 3 from 117.6 in the prior week.

"We have a situation where we have veered somewhat from the recession track but still not out of the woods," said Anirvan Banerji, ECRI research director. "We're still vulnerable to external shocks," he said.

The index's growth rate, which smoothes out weekly fluctuations, inched higher, to minus-2.4 percent from minus-2.8 percent.

The Weekly Leading Index is composed of a balance of seven major economic indicators. ECRI designs short- and long-term indexes aimed at predicting business cycles, recessions and recoveries in the world's leading economies.

Meanwhile, the nation's employers cut jobs by the largest amount in 10 months in December as economic growth fizzled, surprising Wall Street and helping to generate political momentum for deep tax cuts this year.

The Labor Department said non-farm business payrolls declined for a second consecutive month, dropping by 101,000 after a revised drop of 88,000 in November, which was more than double the government's initial estimate.

The Labor Department also said the unemployment rate held steady at 6 percent.

Wall Street was expecting the unemployment rate in December to remain at 6 percent and non-farm payrolls were expected to grow by 20,000 during the month.

Analysts said the report could help generate political support for President George W. Bush's $674 billion tax-cut proposal. The latest unemployment report raised worries within the Bush administration that the country may be in the middle of a jobless recovery and should put pressure on Congress to pass a stimulus plan, White House spokesman Ari Fleischer said.

"The president remains very concerned about the potential for a jobless recovery, and this is why he calls on Congress to act as quickly as Congress can to pass a job-creating initiative that stimulates the economy," Fleischer said.

Interestingly enough, Fleischer did not say that the Congress should pass the president's own $674 billion economic stimulus plan. This plan has met with stiff opposition in the Senate and some Republicans have already said it can't pass as it is currently written.

Meanwhile, Wachtel noted "on the geopolitical front, still no smoking gun on Iraq weapons inspection, but consternation as North Korea pulls out of the global treaty, curbing the spread of nuclear arms."

Elsewhere, U.S. Treasury prices pushed higher. The 10-year bond rose 10/32 to 98 28/32. Its yield, which moves in the opposite direction of its price, slipped to 4.14 percent from 4.18 percent late Thursday.

In Europe, stock prices ended slightly higher in moderate pre-weekend trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index gained 32.2 points, or 0.8 percent, to 3,966.2. The German DAX index rose 10.32 points, or 0.3 percent, to 3,048.00 and the French CAC-40 index added 7.84 points, or 0.3 percent, to 3,160.13.

Analysts said European markets came off their lows following the recovery on Wall Street, although the gains were dampened by weakness among aerospace and airline stocks.

The resolution of a public service wage dispute gave some welcome positive news to the German market, experts added.

In Asia, prices eased in light pre-holiday trading for the fourth consecutive session on the Tokyo Stock Exchange, pressured by news that North Korea had decided to withdraw from the 1970 nuclear non-proliferation treaty. The blue-chip Nikkei Stock Average, which eased 19.87 points Thursday, fell 27.48 points, or 0.3 percent, to 8,470.45, after trading between a low of 8378.18 and a high of 8,569.85.

Markets in Tokyo will be closed on Monday for a public holiday.

Analysts said despite some developments that might have been expected to support market sentiment, such as the strong gains on Wall Street Thursday and a rebound in the U.S. dollar on global currency markets, stocks pushed lower for much of the session.

The Nikkei index fell briefly below 8,400 for the first time since Dec. 24 on renewed selling prompted by the news of North Korea's withdrawal from the nuclear non-proliferation treaty.

Experts said the market's downside was supported by selected buying of high-tech and exporter stocks following the gains on Wall Street Thursday and the weakening of the yen against the dollar.

Prices ended higher on the Hong Kong Stock Exchange. The blue-chip Hang Seng Index, which slipped 12.80 points during the previous session, added 46.09 points, or 0.5 percent, to 9,721.50, supported by Thursday's gains on Wall Street.

Stocks ended slightly lower on the South Korean Stock Exchange. The Korea Composite Stock Price Index, or Kospi, which fell 21.32 points during the previous session, eased 2.04 points, or 0.3 percent, to 628.36 as most investors brushed aside news of North Korea's decision to pull out of the treaty.

Prices on the Taiwan Stock Exchange ended higher, lifted by Thursday's rally on Wall Street. The key Weighted Index, which lost 23.20 points during the previous session, rose 37.07 points, or 0.8 percent, to 4,850.80.

Meanwhile, Singapore stocks ended higher for the third consecutive session in light trading. The key Straits Times Index, which rose 2.77 points during the previous session, gained another 12.08 points, or 0.9 percent, to 1,347.17.

Prices ended marginally lower in light pre-weekend trading on the Australian Stock Exchange. The blue-chip All Ordinaries Index, which dipped 9.80 points during the previous session, slipped 0.60 point to 3,035.00.

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